COSATU sends warning after R7.29 billion in unpaid pension contributions by employers
South African Pension Crisis Deepens as Defaulting Employers Double
Image: Denis Farrell/ AP
The Congress of South African Trade Unions (COSATU) has issued a stark warning about the rapidly growing problem of employers defaulting on pension fund contributions, a breach that threatens the financial security of nearly 600,000 workers across key sectors.
In a statement released on Sunday, COSATU spokesperson Zanele Sabela revealed that the number of employers failing to pay workers’ deducted pension contributions has more than doubled since last year.
According to the latest Financial Services Conduct Authority (FSCA) report, 15,521 employers are now in default—up from 7,700 in 2024 and dramatically higher than the initial 4,000 reported in 2023.
“This disturbing trend places the livelihoods and futures of hundreds of thousands of South African workers at risk,” Sabela said.
“When pension contributions are withheld or remain in arrears, workers lose critical benefits such as death and disability cover, which can have devastating consequences for them and their families.”
The sectors most affected remain the automotive industry, private security firms, and municipalities. Collectively, these defaulters owe a staggering R7.29 billion in unpaid pension contributions.
COSATU stated that the automotive sector, already weakened by a 30% tariff on exports to the US, faces further strain following shutdowns and retrenchments, such as Goodyear’s closure and Ford’s planned layoffs of over 470 workers.
It stated that such instability makes securing pension funds even more vital.
“Municipal workers, too often grappling with months of unpaid salaries due to maladministration, suffer the added blow of not honoruing pension contributions.
“This withholding erodes their retirement savings through lost compounding returns and complicates their access to funds under South Africa’s Two-Pot Pension system, designed to ease financial pressure.
COSATU said that defaulting employers are violating Section 13A of the Pension Funds Act, which mandates the timely payment of retirement fund contributions and compliance enforcement.
The federation said it has previously called out private security companies that simultaneously default on pension payments yet receive lucrative government contracts—an incongruity COSATU condemns.
“We have insisted that the government must not reward lawbreakers with tenders but lead by example,” Sabela said.
Sabela mentioned that COSATU is engaging with government bodies, including the FSCA and the Department of Employment and Labour, to develop lasting solutions.
The organisation said at Nedlac that dialogue is ongoing to address the crisis, and agreements have been reached to bolster labour inspection mechanisms.
Furthermore, Sabela said that the number of Labour inspectors is set to increase tenfold from 2,000 to 22,000 by 2026 to improve oversight of pension contribution compliance.
“We are ramping up campaigns with our affiliates in the hardest-hit sectors to expose and hold employers accountable,” Sabela added.
“We will ensure that all monies owed—including interest—are paid, to protect the rights and futures of all workers.”
thabo.makwakwa@inl.co.za
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